Walmart (WMT) financial results review and outlook for the 3Q (August-October) fiscal year ending 2023/1
In the company's 3Q (August-October) financial results for the fiscal year ending 2023/1, when sales were 152.81 billion dollars, up 8.7% from the same period last year, and when excluding 3.3 billion 25 million dollars recorded as litigation settlement related expenses, EPS after Noon-GAAP adjustment was 1.50 dollars (4.57 dollars for the same period last year). Both sales and adjusted EPS exceeded market expectations. Sales at existing Walmart stores in the US also increased by 8.2%, which greatly exceeded market expectations. Food sales were strong, and e-commerce increased 16% from the same period, contributing to the overall situation. The average number of purchases at existing stores increased by 2.1%, and the average unit price increased 6.0%, contributing to the increase in sales, existing store sales of membership-based Sam's clubs increased 10.0%, and Sam's Club membership fee revenue increased 8.9%. In terms of profit, foods with low margins were doing well, and operating profit margins declined to 1.8% due to promotion of discounts (same 4.1%). Meanwhile, inventory elimination progressed through expanded discounts, and adjusted operating income increased 4% (6 billion dollars) from the same period.
In response to solid 3Q results, the company raised its full-year results for the fiscal year ending January 2023. Sales for the fiscal year ended January 2023 were 5.5% increase from the previous year based on exchange headwinds of 4.1 billion dollars, and in addition to being raised from the previous 4.5% increase, the adjusted EPS for the full fiscal year was revised upward from the conventional 9 to 11% decrease compared to the same period last year to the same 6 to 7% decrease. Sales at existing US stores were raised from a 4.0% increase to a 5.5% increase. A stock repurchase plan worth 20 billion dollars has also been revealed.
Under such circumstances, it seems that the US year-end sales season in '22, which was carried out from October, was sluggish, earlier than usual. Retail sales (seasonally adjusted) for 22/12 announced by the U.S. Department of Commerce on 1/18 fell 1.1% from the previous month, falling above the same 1% decline expected by the market. Also, the 22/11 data was revised downward from a 0.6% decrease from the previous month to a 1% decrease. Also, according to the announcement of the American Retailers Association on 1/19, US year-end sales for 2022/11/12 were 936.3 billion dollars, up 5.3% from the same period last year, which was lower than the advance forecast (942.6 billion to 960.4 billion dollars, an increase of 6 to 8%). The growth rate has shrunk drastically from a record high of 14% increase in 21. Sales of electronic devices, furniture, etc. other than necessities were sluggish due to inflation. E-commerce sales increased 9.5% from the same period to 261.6 billion dollars, accounting for less than 30% of the total amount. Advance expectations (10-12% increase of 262.8 billion dollars to 267.6 billion dollars) fell short.
2022/12 US retail sales trends announced by the U.S. Department of Commerce
In response to solid 3Q results, the company raised its full-year results for the fiscal year ending January 2023. Sales for the fiscal year ended January 2023 were 5.5% increase from the previous year based on exchange headwinds of 4.1 billion dollars, and in addition to being raised from the previous 4.5% increase, the adjusted EPS for the full fiscal year was revised upward from the conventional 9 to 11% decrease compared to the same period last year to the same 6 to 7% decrease. Sales at existing US stores were raised from a 4.0% increase to a 5.5% increase. A stock repurchase plan worth 20 billion dollars has also been revealed.
Under such circumstances, it seems that the US year-end sales season in '22, which was carried out from October, was sluggish, earlier than usual. Retail sales (seasonally adjusted) for 22/12 announced by the U.S. Department of Commerce on 1/18 fell 1.1% from the previous month, falling above the same 1% decline expected by the market. Also, the 22/11 data was revised downward from a 0.6% decrease from the previous month to a 1% decrease. Also, according to the announcement of the American Retailers Association on 1/19, US year-end sales for 2022/11/12 were 936.3 billion dollars, up 5.3% from the same period last year, which was lower than the advance forecast (942.6 billion to 960.4 billion dollars, an increase of 6 to 8%). The growth rate has shrunk drastically from a record high of 14% increase in 21. Sales of electronic devices, furniture, etc. other than necessities were sluggish due to inflation. E-commerce sales increased 9.5% from the same period to 261.6 billion dollars, accounting for less than 30% of the total amount. Advance expectations (10-12% increase of 262.8 billion dollars to 267.6 billion dollars) fell short.
2022/12 US retail sales trends announced by the U.S. Department of Commerce
Looking at the breakdown by product of the American Retailers Association, while food and beverage stores were doing well with a 7.8% increase, the decline was conspicuous, with electronic devices and home appliances selling well on sale each year falling 5.7%, and furniture falling 1.1%. It seems that there were many consumers who bought food and daily necessities in bulk at sales in order to reduce the burden on households.
Walmart's product structure distinguishes it from high-priced products, and the main products are food, daily necessities, clothing, and household goods in the low to medium price range. Statistics from the U.S. Department of Commerce and statistics from the American Retailers Association show that in addition to shunning high-priced products, American consumers are refraining from consuming electrical equipment and furniture that are rarely related to their daily lives. As a result, it seems that the trend and decline in consumption due to poor performance in home appliances, furniture & food, and daily necessities was conspicuous. Walmart has indicated that adjusted EPS for the fiscal year ending 2023/1, including the 2023/1 year-end sales season, will decrease by 3 to 5% compared to the same period last year, but there is a possibility that actual 4QEPS will greatly exceed company expectations and performance will be strong.
Walmart's product structure distinguishes it from high-priced products, and the main products are food, daily necessities, clothing, and household goods in the low to medium price range. Statistics from the U.S. Department of Commerce and statistics from the American Retailers Association show that in addition to shunning high-priced products, American consumers are refraining from consuming electrical equipment and furniture that are rarely related to their daily lives. As a result, it seems that the trend and decline in consumption due to poor performance in home appliances, furniture & food, and daily necessities was conspicuous. Walmart has indicated that adjusted EPS for the fiscal year ending 2023/1, including the 2023/1 year-end sales season, will decrease by 3 to 5% compared to the same period last year, but there is a possibility that actual 4QEPS will greatly exceed company expectations and performance will be strong.
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